The campaigners behind the Bill savagely attacked Mr Lamb and said the decision would “haunt” the LibDem leader Nick Clegg who had "handed down a death sentence to cancer patients".

Lord Saatchi told The Telegraph he was “in a state of shock” that the LibDems could veto a policy which was so strongly backed by the Conservatives in this way.

He said: “They have killed the Medical Innovation Bill. It is dead. By killing the Bill they have killed the hopes of thousands of cancer patients.

“It is as simple as that. Nick Clegg has handed down a death sentence to cancer patients. It is an extraordinary turn of events.

“This is a grotesque insult to the House of Lords. The Liberal Democrats are saying that the House of Commons will never debate this Bill which has been sent to it and passed by the House of Lords.

“I have no difficulty putting this at Nick Clegg’s door. I am very happy to stand that on him. There is no doubt that he has authorised the letter.

“One day he will feel very guilty about this I imagine. To do what he has done, to kill all these people’s hopes, is something that will haunt him.”

The Bill started life as a Private Members’ Bill in the House of Lords before it won government support after new safeguards were introduced last year.

It was due to be debated by MPs on Friday in a race to ensure it was put onto the statute books by the end of next month, when MPs break for the election campaign. However it was pulled at the 11th hour.

Mr Lamb has now offered a review of the plans, chaired by a senior medical expert like the Labour peer Lord Winston, which would report after May’s general election.

Dominic Nutt, a spokesman for Lord Saatchi’s campaign, added that the decision was “a shameful way to do business” and “disingenuous, dissembling cowardice”.

He said: “It is the most illiberal undemocratic move by the so-called Liberal party, to deny elected MPs the right to debate and vote on a bill supported by thousands of patients and voters.”

He accused Mr Lamb of “monumental and feudal arrogance”, adding: “Norman Lamb knows that he is finding a way to kick this into the long grass and that he has personally destroyed the bill without the option for a vote.

“Norman Lamb claims he supports it, yet he has personally and singlehandedly destroyed it with a stroke of his pen.”

Mr Nutt said the Bill – technically a Private Members Bill with Government support – had “undergone a full public consultation, two years of media scrutiny, four full debates in the House of Lords” and been amended by all parties and medical and legal experts.

However Mr Lamb hit back, claiming that there were real doubts about the legislation as it has been drafted, saying that the decision to axe it was “a collective decision”.

The Bill had come under sustained attack from personal injury lawyers who said it would leave patients at the mercy of “maverick doctors”.

Writing for The Telegraph’s website, Mr Lamb said: “The Liberal Democrats have listened to the concerns of patient organisations, research charities, legal bodies, royal colleges and medical unions who have told us the Bill in its current form could actually put patient safety at risk.

“Surely we shouldn’t rush this through the House of Commons under pressure of time before the general election when organisations like the Patients’ Association, Action Against Medical Accidents, the Wellcome Trust, the British Medical Association and the Royal College of Physicians raise serious concerns?”

Some “highly vulnerable people, desperate for a chance of recovery or remission, could be easy prey for exploitation by the few unscrupulous practitioners who peddle false hope”, he said.

“So, faced with this level of concern, but recognising the profound importance of innovation and of saving lives, the best way to proceed is surely to appoint an eminent person examine what the barriers to innovation really are and how best to overcome them.

“I am not interested in pushing this into the long grass. It should be given priority but we must get it right. Such an examination of the issue should involve patient organisations, legal bodies, royal colleges and medical unions.”

Sarah Wollaston, the chairman of the House of Commons’ Health select committee, supported Mr Lamb. She said: “It was unnecessary, there would be a huge number of unintended consequences.

“This was the wrong answer to medical innovation. It would hamper recruitment for medical trials. It was a ‘charlatan’s charter’ and will lesson protections for patients.”

Another opponent Sir Robert Francis QC, who carried out the review into scandal at Mid-Staffordshire Hospital and president of the Patients' Association, added: “I have every sympathy with Lord Saatchi and all those who have been through the terrible experience of finding that they are not offered treatment which they believe might offer the chance of saving their lives or improving their condition.

“However I do not agree that the cause of any reluctance on the part of the medical profession to offer treatments of this kind is anything to do with the fear of being sued for negligence. I am afraid that because it starts from the wrong place.”

Mr Francis said that the Bill would “cause confusion, lead to a greater threat of legal consequences because of the additional uncertainties it creates [and] make it more likely that those few doctors who have ulterior motives for offering or trying to sell dubious treatments could exploit a very vulnerable group of patients”.